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Comment by harryjo | Hacker News Reader

My employer told me "Our last round valued us at $XXXX for YYY shares. you have ZZZZ options at $WWWW strike price."

Is this unusual?

Of course this can be diluted, but it seems I had the numbers. I guess I didn't know the updated numbers for future rounds, until buyback offers came around or people quit and exercised and filed their taxes and shared numbers.

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It’s fairly disingenuous to use the fundraising valuation. Investors have a ton of preferences that make their shares more valuable. Probably cut that by a third or ask to see the most recent 409a valuation. Walk through possible exits with dilution, assess the likelihood of those exits, and try to make a calculated guess at the payoff. In all likelihood it is less then working for 4 years at a big company and founders saying it isn’t are selling their book. If they can’t make the follow on valuation gates and see an exit, you probably won’t make anything. Even if they exit at the valuation when you joined, your shares will likely be worthless as senior preference holders get their guaranteed returns.

Without disclosing the complete capital structure, especially debt and stock liquidation preferences and multiples, your company has essentially just misled you (unless there are no preferences and all shares have equal liquidation).

There can be other clauses (in bylaws for example) which can prevent transfers and effectively render your shares worthless.

See [1] for my recent experience with Gusto.

[1]: https://medium.com/@octopoedi/dear-gusto-mission-is-more-tha...

More interesting to me would be "We made -$$ on $$$ in revenue, revenue has been growing at 120% so our runway is xx months"

Not really. The simplest explanation is that you are getting a discount relative to what the investors paid. Investors usually get preferred stock, whereas rank-and-file employees usually get common stock, which has far fewer protections than preferred. They should be able to tell you this if you asked them, though.

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